The Curse of Black Gold: Oil Is Bad News for a Country; Far from Bringing Prosperity, It Is the Harbinger of Poverty, Malnutrition and Oppressive Government

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In the great 1970s sitcom Rising Damp, the late Leonard Rossiter played Rigsby, the miserable owner of a boarding house. In one episode, he was forced to find reasons to be cheerful when he had to talk a suicidal lodger down from the roof. After toying with the joys of the springtime, inspiration hit him. "Think of North Sea oil!" he cried. Those of us of a certain age can remember the thrill those three little words produced. Oil was going to take us from the dowdy 1970s and transform Britain into a prosperous and contented land.

It didn't quite work out like that. The dowdy 1970s were followed by the calamitous early 1980s, when unemployment went from one to four million. Much of the blame for the collapse of British manufacturing rested with Margaret Thatcher's demented monetarist experiment. North Sea oil revenues helped pay for the cost of keeping millions on benefit, so in that sense oil mitigated the worst effects of Thatcherism. But oil revenues also allowed Britain to tolerate mass unemployment and deeply damaged exports by further forcing up the already unsustainably high value of sterling.

Looking back, it is hard to see the oil as a blessing. In the developing world, the blessings of oil have been even more elusive. At about the time Rigsby was reeling in his tenant, Juan Pablo Perez Alfonzo, a Venezuelan oil minister and founder of the Organisation of Petroleum Exporting Countries, gave a prophetic speech to his countrymen. "Ten years from now, 20 years from now, you will see, oil will bring us ruin. It's the devil's excrement. We are drowning in the devil's excrement."

The usual complaints about the dependence on oil are that it destroys the environment and starts wars. A new report from Christian Aid adds poverty and corruption to the list. * It is written as a warning to the Iraqis as their oil flows again. They would do well to take it seriously. Oil has a history of impoverishing its producers.

In 1995, Professor Jeffrey Sachs of Harvard University and his colleague Andrew Warner looked at how the possession of oil and other raw materials affected national economies.

Conventional wisdom held that there was no better news for people than prospectors striking lucky on their land. Sachs and his colleagues found that, on the contrary, the more a country depended on natural resources, the lower its growth rate. Not quite believing his own results, he double-checked, introduced new variables and checked again. The results were indisputable.

Professor Michael Ross of the University of California backed them up with a chart which mapped oil sales against literacy and malnutrition rates. Each 5-percentage-point rise in oil exports was matched by a three-month fall in life expectancy and a 1-point rise in childhood malnutrition.

Nigeria is the clearest case of what Christian Aid calls the "oil curse". Possession of Africa's largest oil reserves did not prevent the proportion of households living in absolute poverty -- that is, managing on $1 a day, or less -- rising from 27.8 per cent in 1980 to 66 per cent in 1996. In Angola and the Sudan, the battles to control oilfields exacerbated the terrible civil wars brought on by tribalism and religion.

Alfonzo's Venezuela has earned $600bn from oil since the 1970s, but the real income per head of its citizens fell between 1973 and 1985, and is falling again today. Even those Arab oil countries that in the 1970s captured the popular imagination of the world with their fabulous wealth -- Kuwait, Saudi Arabia, the United Arab Emirates, Bahrain and Iran -- saw their economies contract between 1970 and 1989: yet these were years that covered the supposed boom time of the Opec cartel.

Indeed, an underappreciated reason for Saudi Arabia's role as seedbed of the most brutish religious bigotry is that the promises of wealth its citizens received in the 1970s have proved illusory. Saudi Arabia has one-quarter of the world's oil reserves, and oil and gas exports account for 80 per cent of the country's exports, but it remains relatively poor. …